Publication: Shared Prosperity : Links to Growth, Inequality and Inequality of Ppportunity
Date
2013-10
ISSN
Published
2013-10
Author(s)
Abstract
Focusing on the welfare of the less well
off as a measure of real societal progress is the
fundamental principle underlying the WBG indicator of
"shared prosperity", namely income growth of the
bottom 40 percent in every country. This paper uses a
database assembled by the World Bank Group to investigate
some basic characteristics of shared prosperity,
particularly its relationship with overall economic growth
and inequality. Initial estimates using this dataset of 79
countries show that median income growth of the bottom 40
percent (circa 2005-2010) was 4.2 percent, a high number in
comparison to the 3.1 percent per capita income growth of
the overall population. In addition, the low and
lower-middle income countries appear to be trailing the
upper middle and high income countries in boosting shared
prosperity. Establishing conceptual links between income
growth of the bottom 40 percent, the overall growth rate and
reviewing existing evidence on how these relate to
inequality, the paper discusses two main ideas. First,
shared prosperity is strongly correlated with overall
prosperity implying that the whole host of policies that are
important to generate and sustain growth remain relevant.
Second, boosting shared prosperity will also require a
concerted effort to strengthen the social contract,
particularly in the area of promoting equality of
opportunity. Growing evidence suggests that improving access
for all and reducing inequality of opportunities --
particularly those related to human capital development of
children -- are not only about "fairness" and
building a "just society", but also about
realizing a society's aspirations of economic prosperity.
Citation
“Narayan, Ambar; Saavedra-Chanduvi, Jaime; Tiwari, Sailesh. 2013. Shared Prosperity : Links to Growth, Inequality and Inequality of Ppportunity. Policy Research Working Paper;No. 6649. © World Bank, Washington, DC. http://hdl.handle.net/10986/16866 License: CC BY 3.0 IGO.”
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